WTI Oil – Bears regained control but struggling to clear key $70 support

Oil price is holding in red for the third straight day, under fresh pressure on renewed concerns about economic situation in the world’s two largest oil consumers – US and China.

Crisis in banking sector and no results in solving problem with debt ceiling so far, mark the major issues in the US these days, as another regional bank came on shaky ground, while talks about rising the government’s debt ceiling have been postponed again, adding to warning from Treasury Secretary Janet Yellen about potential economic catastrophe on failure to raise debt ceiling before the deadline..

Economists are also not convinced that inflationary pressure is easing at desired pace despite sharp increase in borrowing costs, which also add to uncertainty about oil demand outlook.

Latest economic data from China signal that the pace of recovery from Covid restrictions was below expectations and could further hurt energy demand, though OPEC kept is forecast for global oil demand in 2023 unchanged and remain optimistic about growth of Chinese oil demand, which would offset immediate threats of slowdown.

Technical picture on daily chart remains weak after recent recovery was capped by daily cloud and Kijun-sen (73.60), though fresh bears need clear break through pivotal $70 zone (psychological / Fibo 38.2% of $63.63/73.85 rally / daily Tenkan-sen) to confirm reversal and open way for deeper drop.

Traders remain cautious after last week’s strong downside rejection which left a bear-trap under 200DMA and also failed to register weekly close below cracked $70 support, pointing to strong headwinds that fresh bears face.

Res: 70.61; 71.68; 72.31; 73.57
Sup: 70.00; 69.10; 68.74; 67.53